If a plan does not currently allow for hardship distributions, can the plan elect to amend their plan to allow only the coronavirus-related distribution and not hardship withdrawals?
Yes, a plan may permit coronavirus-related distribution only; it does not have to offer a hardship withdrawal option.
On May 4, the IRS in the FAQ confirmed that “It is optional for employers to adopt the distribution and loan rules of section 2202 of the CARES Act. An employer is permitted to choose whether, and to what extent, to amend its plan to provide for coronavirus-related distributions and/or loans that satisfy the provisions of section 2202 of the CARES Act” (see Q.9 of the IRS FAQ).
Cetera Retirement Plan Specialists is a third-party administrator and may not offer tax, legal or investment advice. Plan sponsors should consult their own tax, legal or investment professionals.